NETHERLANDS - Dutch pension funds must avoid putting off measures to combat underfunding if only to keep younger generations from having to foot the bill for older generations "ageing happily", according to the Pension Federation.

Speaking at the federation's first congress, chairman Kick van der Pol received instant support from Klaas Knot, the new president at supervisor De Nederlandsche Bank (DNB).

Knot said any delay would come at the expense of the crucial solidarity between the generations.

According to Van der Pol, the Dutch pensions sector is in bad shape, and the coverage ratios of many schemes have fallen short of their recovery plans.

"As a consequence, the prospect of rights cuts in 2013 is very real," he said, adding that gaining the trust of the younger generations was very important for the viability of the pensions system.

Van der Pol tried to put into perspective the impact of external experts on schemes boards by pointing out that they would have been unable to prevent such things as the financial crisis or rising longevity.

In his opinion, the pensions sector must remain anchored in society and maintain a link with the social partners.

The chairman also said he regretted that social affairs minister Henk Kamp had removed the one-tier model from his governance legislation, as "several pension funds have reported a positive experience with this board set up".

During the congress, DNB president Knot reiterated his objections against a new discount rate for liabilities that could encourage pension funds to take too much risk.

As part of the recent pensions deal, the social partners and minister Kamp have agreed to introduce a discount rate that takes assumptions for future returns into account, rather than the current risk-free forward curve.

Representatives of lobbying organisations for the elderly, as well as of young members of the unions federation CNV, also criticised the new discount rate.

Topics